Non-charitable expenditure

A UK charity qualifies for a number of tax exemptions on income and gains and on profits from some activities. The charity can only claim these tax exemptions if, in broad terms, in some cases the charity uses the money that it receives for its own charitable purposes or in other cases for general charitable purposes. There is no requirement to apply the income/gains/profits to specific projects, nor is there a time limit by which the funds must be spent, and it is quite permissible to use the funds for the general administrative purposes of the charity.

The above tax exemptions and reliefs are, however, reduced to the extent that the charity incurs non-charitable expenditure. ‘Non-charitable expenditure’ is expenditure incurred by a charity which is not incurred for charitable purposes exclusively. If non-charitable expenditure is incurred there will be a potential tax liability for the charity.